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Crude oil prices recouped last week from monthly lows as slowdown in OPEC+ output and lower US inventories bolstered prices. Whereas, a lower demand from China due to Covid-19 led lockdowns checked major gains

Energy

• WTI and Brent crude variants soared more than 8.0 percent last week.

• China’s refinery output slips to 5-month low due to higher crude oil prices and lower fuel demand owing to Covid-19 led lockdown.

• OPEC cut its forecast for growth in world oil demand in 2022 in its April month’s report citing tension in Ukraine.

• Russian oil production has declined by 7.5 percent so far in April.

NYMEX Crude oil prices settled above $106 a barrel last week

Crude oil prices recouped last week from a monthly low last week due to falling inventory in US and on OPEC+ setback in meeting pledged production increase. The Unresolved tensions in Ukraine and European Union’s plan to set energy embargo on Russia continue to bolster supply worries. Meanwhile, slowing demand from China due to lockdowns checked oil prices.

China refinery output slips to 5-month low as lockdown hurts demand

China refined 2 percent less oil in March than a year earlier, with throughput falling to its lowest level since October as a surge in crude oil prices squeezed margins and tight COVID-19 lockdowns hurt fuel consumption. Refining volume last month was 58.59 million tonnes, equivalent to 13.8 million barrels per day (bpd), data from China’s National Bureau of Statistics (NBS) showed. That compares with 14.08 million bpd in March 2021 and 13.98 million bpd in the January-February period this year. First-quarter throughput in China fell 1.5 percent year-on-year to 171.44 million tonnes, or 13.91 million bpd, the data showed. China's independent refiners operated at 52.15% of capacity at the end of March, compared with 60.93 percent early in the month. Operating rates also drifted lower at state-backed refiners in March as capacity of about 460,000 bpd was taken off line for maintenance.

Russian oil output down 7.5% in April so far

Russian oil production has continued to slide in April, declining by 7.5 percent in the first half of the month from March as per a news from Reuters. Oil output has been under pressure amid sanctions from the West over Moscow's activities in Ukraine. Russian oil and gas condensate output stood at 1.392 million tonnes per day on average in the first two weeks of April, down 7.45 percent from March. In barrels, output declined to 10.2 million per day (bpd) from 11.01 million in March.

OPEC cuts 2022 world oil demand forecast due to Ukraine war

OPEC in its April month’s report cut its forecast for growth in world oil demand in 2022 citing the impact of Russia's invasion of Ukraine, rising inflation on higher energy prices and the resurgence of the Omicron coronavirus variant in China. OPEC also cuts 2022 oil demand growth forecast by 480,000 bpd. Russian oil output forecast for 2022 was also revised downward but expects more production from US shale industries. OPEC March output rises 57,000 bpd, lagging pledged hike.

Money managers increased Net Longs in NYMEX Crude

Money managers increased their net long positions in US crude futures and options contracts in the week ended April 15, the US Commodity Futures Trading Commission (CFTC) reported.

US Crude stock level increased, gasoline and distillate fell

US crude stocks increased in the week ended April 8, as per the Energy Information Administration (EIA). Crude inventories increased by 9.382 Million barrels, distillate stocks fell by 2.902 million barrels while gasoline stocks fell 3.649 million barrels. US crude oil imports averaged 6.0 million barrels per day in the same week, down by 305,000 barrels per day from the preceding week. Refineries operated at 90 percent of their operable capacity in the week ended April 8.

Technical Outlook

Demand-supply dynamics continue to influence the short term price outlook of oil. Export restriction from Russia due to deepening crisis in Ukraine coupled with worries over limited additional supply from other producers to offset the reduced flow from Russia remains support the global oil prices. OPEC plus’s restrictive production policy and soaring US oil prices due to increased export demand to Europe also assisting the prices. However, lower demand from China due to Covid 19 led lockdowns may check major gains in the immediate run.

NYMEX Apr: As long as the support of $101 hold the downside, expect positive momentum to continue in short term. Meanwhile, consistent trades below $93 is a short term reversal signal.

MCX Apr: Expect a range bound trade inside R 8900-7000 levels with positive outlook initially. Consistent trades below Rs 7000 is a sign of weakness.

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